Accounting for Public Sector Organizations Exam Practice Tests
Course Introduction
This course explores the principles, standards, and practices of accounting as applied to public sector organizations, including government agencies and not-for-profit entities.
Students will examine the unique regulatory and reporting requirements that distinguish public sector accounting from private sector practices, with a focus on budgeting, fund accounting, financial statement preparation, and accountability to stakeholders. Emphasis is placed on understanding the role of accounting information in public resource allocation, financial management, performance measurement, and decision-making within the context of transparency and public trust.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 11th Edition by Copley
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14 Chapters
1814 Verified Questions
1814 Flashcards
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Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) A government may have two or more General Funds.
A)True
B)False
Answer: False
Q2) Fund-basis statements are presented for three categories of government activities: governmental,proprietary,and fiduciary.
A)True
B)False
Answer: True
Q3) State and local governmental funds are organized into three categories including:
A) governmental, proprietary, and restricted
B) proprietary, fiduciary, and restricted
C) governmental, fiduciary, and restricted
D) governmental, proprietary, and fiduciary
Answer: D
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements.
A)True
B)False
Answer: False
Q2) Which of the following statements is false?
A) With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful.
B) When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds.
C) When preparing fund basis financial statements, any funds not reported separately are reported by function.
D) In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.
Answer: C
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) How would purchase orders and contracts be reported under modified accrual accounting and accrual accounting?
Modified Accrual Accrual
A) Expenditure Liability
B) Expenditure No entry
C) Encumbrance Liability
D) Encumbrance No entry
Answer: D
Q2) An example of an imposed nonexchange revenue is the property tax.
A)True
B)False
Answer: True
Q3) Expenditure is a decrease in fund financial resources (net of liabilities)other than through interfund transfers.
A)True
B)False
Answer: True
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Chapter 4: Accounting for the General and Special Revenue Funds
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Governmental fund financial statements are prepared using the current financial resource measurement focus.
A)True
B)False
Q2) The purpose of fund accounting is to segregate those financial resources that have constraints or limitations on their use to demonstrate compliance with those limitations.
A)True
B)False
Q3) What is the difference between an extraordinary and special item?
Q4) The Town of Little River expects to collect $90,000 in sales tax from the state government within 30 days of the end of fiscal year 2014 for retail sales taking place in fiscal year 2014.What entry,if any,would Little River make at the end of 2014?
A) Taxes receivable - current 90,000 Revenues control 90,000
B) Taxes receivable - deferred 90,000 Revenues control 90,000
C) Taxes receivable - current 90,000 Due from state government 90,000
D) Due from state government 90,000 Revenues control 90,000
Q5) What is the difference between reciprocal interfund activity and nonreciprocal interfund activity?
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) A Special Projects Fund is a fund type that is used to account for revenues and other financing sources that are intended to service debt.
A)True
B)False
Q2) Which of the following would be true as of January 1,2014?
A) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $40,000.
B) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $33,699.
C) An entry would be made debiting Capital Expenditure and crediting Capital Leases Payable in a governmental fund, both in the amount of $33,699.
D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $33,699.
Q3) Only the General Fund has a positive Unassigned Fund Balance
A)True
B)False
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Page 7
Chapter 6: Proprietary Funds
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) If a government decides to account for its risk management activities in a single fund,it must use:
A) An Internal Service Fund.
B) A Fiduciary Fund
C) A Special Revenue Fund.
D) Either the General Fund or an Internal Service fund.
Q2) The reconciliation on the statement of cash flows for a proprietary fund under GASB requirements is between operating income and cash flows from operating activities.
A)True
B)False
Q3) Which of the following is true of the Statement of Net Assets for proprietary funds?
A) a classified format is used in which current assets, noncurrent assets, current liabilities, and noncurrent liabilities are presented separately.
B) separate disclosure is required for major enterprise funds and a total for all non-major enterprise funds
C) Neither A nor B are correct.
D) Both A and B are correct.
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Chapter 7: Fiduciary Trustfunds
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) GASB Standards require that IRS 457 Deferred Compensation Plans,if administered by the governmental unit,be reported as pension trust funds.
A)True
B)False
Q2) Which of the following statements is correct with respect to GASB Statement No.53 which establishes reporting requirements for governments entering into derivative instruments?
A) Changes in the value of hedge derivatives are reported in the Statement of Net Assets.
B) If a derivative is an investment derivative, the changes in the value of the derivative are deferred and reported in the statement of net assets.
C) Statement No. 53 does not apply to proprietary or fiduciary funds.
D) Statement No. 53 applies to government financial statements prepared using the modified accrual basis of accounting.
Q3) The Accrual Basis and Current Resource Measurement Focus are used for Private-Purpose,Investment Trust and Pension Funds.
A)True B)False
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9
Chapter 8: Government-Wide Statements, Capital Assets,
Long-Term
Debt
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Internal service funds are most commonly reported in which section of the Government-wide financial statements?
A) Governmental Activities
B) Business-type Activities
C) Component Unit
D) None of the above.
Q2) A local government recorded the sale of a capital asset at a gain by recording a debit to cash and credit to proceeds of sale of capital asset.What is the worksheet entry when preparing the government-wide statements?
A) Debit to Proceeds of sale of capital asset and credit to Gain on sale of capital asset
B) Debit to Cash and credit to capital asset (net) and credit to Gain on sale of capital asset
C) Debit to Proceeds of sale of capital asset and credit to capital asset (net) and Gain on sale of capital asset
D) None of the above
Q3) Identify and describe the required supplementary information schedules that must be prepared when using the modified approach.
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Page 10
Chapter 9: Accounting for Special-Purpose Entities, Including
Public Colleges and Universities
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) GASB Statement 35 extends the provisions of GASB Statement 34 to both public and private colleges and universities.
A)True
B)False
Q2) Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?
A) Statement of Net Assets, Statement of Activities.
B) Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Net Assets.
C) Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Net Assets, Statement of Cash Flows.
D) None of the above.
Q3) Special purpose governments may be stand alone local governments or may be component units of other governments that are issuing separate reports.
A)True
B)False
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Page 11
Chapter 10: Accounting for Private Not-For-Profit Organizations
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Which of the following is true regarding the Statement of Cash Flows for nongovernmental,not-for-profit organizations?
A) Either the direct or indirect method may be used.
B) If a not-for-profit organization received a cash contribution for permanently restricted purposes, that cash contribution would be shown as a cash flow from financing activities.
C) Both of the above.
D) Neither of the above.
Q2) Which of the following is not a characteristic that distinguishes a private not-for-profit organization from a business?
A) Contributions are from resource providers who expect nothing in return.
B) Financial statements are intended primarily for use by donors.
C) The organization's revenues exceed expenses.
D) Absence of ownership interests.
Q3) FASB statement 116 requires contributions to be recorded as revenue when the contributed money is actually received.
A)True
B)False
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Chapter 11: College and University Accounting Private Institutions
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Which of the following is true of a Statement of Activities prepared for a private college or university?
A) All expenses are shown as unrestricted.
B) Reclassifications from unrestricted to permanently restricted net assets are reported when the governing board designates unrestricted funds for permanent investment in the endowment.
C) Only realized gains or losses on investments are reported.
D) All of the above are true.
Q2) A Charitable lead trust is a type of split-interest agreement.
A)True
B)False
Q3) The three classes of net assets required to be presented by a private college or university are:
A) Permanently Restricted, Temporarily Restricted, and Unrestricted.
B) Reserved, Unreserved, and Undesignated.
C) Invested in Capital Assets net of Related Debt, Restricted, and Unrestricted.
D) Educational and General, and Auxiliary Enterprises
Q4) Universities treat athletic scholarships as a reduction in revenue.
A)True
B)False
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Not-for-profit business-oriented organizations use modified accrual accounting.
A)True
B)False
Q2) Patient service revenue for a hospital does not include charges for charity care.
A)True
B)False
Q3) Contractual adjustments from insurance companies are reported as expenses in the Statement of Operations.
A)True
B)False
Q4) The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:
A) Government owned hospitals do not have to prepare a Statement of Cash Flows.
B) Government owned hospitals do not have to record depreciation.
C) The equity accounts have different titles and definitions.
D) All of the above.
Q5) Assume you are reviewing the financial statements of a not-for-profit hospital.Where would you find the account "Assets whose use is limited" and how is it used?
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Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) In a governmental audit the auditor:
A) Is required to report directly to appropriate officials in addition to the board or audit committee
B) Is only required to report to the board or audit committee
C) Is only required to report directly to the appropriate officials
D) None of the above
Q2) All of the following are examples of service outputs,except:
A) Enrollment increases.
B) Dropout rates.
C) The number of gifted or alternative programs.
D) Degrees conferred.
Q3) Which of the following would be considered a performance audit under the Government Auditing Standards?
A) An investigation into whether a purchasing department of a government was operated efficiently.
B) An investigation into whether a social service agency of a state government improved the lives of its clients.
C) Both A and B above.
D) Neither A nor B above.
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Chapter 14: Financial Reporting by the Federal Government
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) Which of the following is responsible for auditing the federal government' consolidated financial statements?
A) Congressional Budget Office
B) Department of Treasury
C) Office of Management and Budget
D) Government Accountability Office
Q2) Assume a federal agency has the following events:
1.Receives a warrant from the Treasury notifying the agency of appropriations of $16,000,000.2.OMB apportions 1/4<sup>th</sup> of the appropriation for the first quarter of the year.3.The Director of the agency allots $ 3,960,000 to program units.4.Program units place orders $ 3,712,000.5.Supplies ($ 500,000)and services ($ 2,975,000)are received and paid during the first quarter.Supplies of $ 417,000 were used in the quarter.
Required:
Prepare any necessary journal entries to reflect the events described above.Identify whether the entry is budgetary or proprietary.
Q3) Identify (in order of occurrence)the steps in the federal budgetary authority process.
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Page 16